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Initial reports show Obamacare insurance costs lower than expected

By David Morgan, REUTERS

Updated:
07/18/2013 06:49:19 PM EDT

A Tea Party member reaches for a pamphlet titled "The Impact of Obamacare", at a "Food for Free Minds Tea Party Rally" in Littleton, New Hampshire in this October 27, 2012 file photo. The Obama administration said on July 2, 2013 it would not require employers to provide health insurance for their workers until 2015, delaying a key provision of President Barack Obama's healthcare reform law by a year, to beyond the next election. REUTERS/Jessica Rinaldi//Files (UNITED STATES - Tags: POLITICS HEALTH) (JESSICA RINALDI)

Hoping to gain the high ground in an escalating war of words over Obamacare, the U.S. administration on Thursday forecast sharply lower than expected insurance costs for consumers and small businesses in new online state healthcare exchanges.

A report by the Department of Health and Human Services (HHS) said data from 10 states and the District of Columbia shows preliminary 2014 premiums on the lowest-cost mid-range "silver" plans in those marketplaces to be 18 percent lower on average than earlier administration and congressional estimates.

Rates for businesses with fewer than 50 employees that purchase small-group coverage through exchanges could also be 18 percent lower than what the same plans would cost without President Barack Obama's landmark healthcare reform law, based on data from six states, HHS said.

The report was released in conjunction with a speech by Obama on how healthcare reform is already benefiting consumers. It represents the administration's latest bid to counter Republican allegations that consumers and businesses will see sharply higher costs from the exchanges than the individual insurance plans already on the market.

The new exchanges are slated to begin enrolling as many as 7 million uninsured Americans for 2014 on October 1 in federally subsidized health plans ranging in quality from platinum, with the highest premiums, to bronze, with the lowest.

"Today's report shows that the Affordable Care Act is working to increase transparency and competition among health insurance plans and drive premiums down," Health and Human Services Secretary Kathleen Sebelius said in a statement accompanying the report.

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The actual rates consumers see could be lower than current estimates, the HHS report concluded, saying that rate reviews and negotiations under way in the District of Columbia, Oregon, Rhode Island and Vermont have already reduced prospective costs announced in the spring.

But it was not clear whether the lower rates contained in the report would be reflected nationwide. The report's authors cautioned that some states could see costs closer to earlier projections.

The exchanges represent the centerpiece of Obama's Patient Protection and Affordable Care Act, and their success could depend on the cost of so-called silver plans, which are expected to attract the largest number of enrollees.

The events come a day after Republicans in the U.S. House of Representatives called in a symbolic vote for a delay of the reform law's individual mandate, which requires nearly all Americans to have health coverage in 2014 or pay a penalty. The House measure is expected to go nowhere in the Democratic-controlled Senate.

A leading insurance group, the Blue Cross and Blue Shield Association, issued a statement late on Wednesday saying that such a delay, if enacted without other insurance market changes, would lead to skyrocketing costs for consumers.

The HHS report said prospective premiums in the 10 states studied appear to be affordable for younger adults, including men, whose participation is vital to the success of the exchanges and healthcare reform overall. Younger healthy people who tend to be cheaper to insure are needed to compensate for older and sicker consumers who are expected to enroll in droves.

In Los Angeles, which has the largest number of uninsured people in the country, HHS said the lowest-cost silver plan for a 25-year-old individual will cost $174 per month without subsidies and $34 per month for an individual whose income is $17,235. A catastrophic plan, which mainly covers major medical costs, will cost $117 per month for an individual.

The 10 states examined in the HHS report are California, Colorado, New Mexico, New York, Ohio, Oregon, Rhode Island, Vermont, Virginia and Washington.

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